Ballmer: MS ready to be top enterprise software vendor

Microsoft CEO Steve Ballmer highlights move to software services

Microsoft is very close to being able to claim it is the No. 1 enterprise software company in the world, according to CEO Steve Ballmer.

"We see the most fantastic growth opportunity of all time in the enterprise," Ballmer said during Microsoft's annual meeting for financial analysts. "I think palpably we are about this close to being able to claim we are the No. 1 enterprise software company in the world which nobody would have been able to say 20 years ago," he said.

Ballmer called out corporate desktops, mail and collaboration, business intelligence, business applications, servers, enterprise search, online enterprise services through Microsoft Online, conferencing and IP telephony, management and virtualization, databases, and database applications. "Our position in almost every one of these categories is improving fantastically," he said.

Ballmer made his comments as part of a broad synopsis of how Microsoft plans to drive shareholder value. The big shift now is the move to software plus services "from a technology-underpinning perspective," he said, adding that Microsoft is the only vendor building this future based on the present state of technology. Every piece of software under the Microsoft banner is under the influence of this shift, not just search and online businesses, he said. "Everything is remapping to a world in which software gets created, distributed, updated and priced somewhat differently based on this shift [to software plus services]," he added.

Development and deployment of tools also are under pressure from this shift, Ballmer said. He doesn't believe in thin clients, and Windows will have a great future, he added. Click-to-run applications like those on the Internet are important for rich clients, Ballmer said. He acknowledged that Web 2.0 would influence changes to the rich client.

Ballmer noted the risk inherent in this shift, but emphasized that Microsoft viewed the risk as opportunity. "Risk means the opportunity to seize and embrace this future," he said.

Ballmer also spent time breaking down search and online advertising, acknowledging Microsoft's lagging position compared to Google but adding that search is only a starting point as everything moves toward digital delivery.

Microsoft is working so hard to make a mark in search and advertising, Ballmer said, because he thinks the potential return on the risk is substantial. There is a trillion dollars of media communications and advertising to pursue, he said. "We don't have a lot of trillion-dollar markets that are being transformed," he said, noting that Microsoft is now the 10th largest seller of advertising in the United States.

To succeed, however, Microsoft will have to "ante up" in a significant way, focus on its goals and reinvent the user model and the business model, Ballmer said. The ante-up will be large, he said, but he did not assign a number. He did say that the original US$46 billion bid for Yahoo was a tactical move, not a strategy, and that Microsoft acted in a disciplined way. He said it was time to move forward and that search and advertising was a two-horse race between Microsoft and Google. Yahoo would have a stake, but not a dominant position, he said.

Despite the future opportunities, Ballmer didn't mince words about the importance of a healthy Windows business. "Windows is the air we breathe, we don't want to get a cold in Windows," he said.

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